For more than 300 years, governments and entrepreneurs around the world have triggered technology advances by offering prizes for creative and beneficial innovations. The results have produced products ranging from food canning to private space flights.

According to a new Discussion Paper, Technology Prizes for Climate Change Mitigation, there is considerable evidence suggesting that prizes offered by public agencies as well as private firms or foundations could help induce the development of technologies aimed at reducing the greenhouse gases that are linked to global climate change.

"There is considerable evidence that technology prizes have a role to play in the portfolio of inducement mechanisms available to spur climate change-related technological advances," write co-authors Richard G. Newell, RFF senior fellow, and Nathan E. Wilson, an economist at the Energy Information Administration at the Department of Energy.

Newell and Wilson suggest that there are "compelling reasons specifically related to climate change" that argue for the implementation of prizes that would provide financial impetus for scientists and engineers. "The scope of technologies that could reduce greenhouse gas emissions is so broad that it is hard to imagine that there is not room for prizes to play a constructive role," the authors note.

To create a successful strategy for designing a prize, the authors recommend considering specific factors such as the technological target, the size and nature of the prize, and the method for selecting the winner. They also highlight the importance of more general considerations such as whether the prize is being administered from the private or public sector.

Because of “their infrequent use but potential promise,” the authors stress that, “policy experimentation and subsequent evaluation of prizes for greenhouse-gas-reduction technologies would be clearly desirable."